Free - Beyond Collapse

Friday, September 26, 2014

Warning from Anonymous - The Next Crisis – Part One

The present global financial ‘crisis’ began in 2007-8. It is not
nearly over. And that simple fact is a problem. Not because of the
life-choking misery it inflicts on the lives of millions who had no part
in its creation, but because the chances of another crisis beginning
before this one ends, is increasing. What ‘tools’ - those famous tools
the central bankers are always telling us they have – will our dear
leaders use to tackle a new crisis when all those tools are already
being used to little or no positive effect on this one?

I think it is worth remembering how many financial crises we have had since the economy became globally interconnected and since we began the deregulation of finance and the roll back of all Great Depression safeguards under
Reagan and Clinton. It’s also worth noticing that the causes and
pattern of the various crises have an unpleasant ring of familiarity
about them – as in – the bank lobbyists making sure nothing gets learned
and nothing gets changed.

In the 80′s there were four financial crises: The Latin American
crisis caused by those countries borrowing and the global banks agreeing
to lend them far too much (too much lending to people who couldn’t
afford it – check), the American Savings and Loan (S&L) crisis when
American S&L’s made too many bad, long-term and leveraged loans
relying on rolling over and over short-term loans to fund it all
(reliance on short-term liquidity to cover massive loan books of dodgy
loans – check) , and the 1987 Stock market crash when the system of
global debt had its first major modern global paroxysm (systemic
contagion – check) . And before the dust had even settled from that we
had the Junk Bond collapse ( Too much junk – check. $400 billion in junk bonds
were issued in 2013 alone). In the 90s there were two more crises (if
one ignores the Mexican currency devaluation): The Asia currency crisis
(a replay of the Latin Crisis with the same global banks doing the same
lending to different corrupt or stupid leaders who agreed to loans on
behalf of people who couldn’t afford to pay back – ie nothing learned
at all - check) and the Dot Com bubble (valuations way above reality
fueled by cheap money and lax lending – check). I think that’s most of
the kinds of greed fueled idiocy accounted for.

If you line up the S&L, the Junk Bond and the Dot Com bubble,
America has had a major home-brewed financial crisis every ten years. If
you consider that none of these events happened in isolation nor
limited their effects to the country of origin then we have to conclude
that the global financial system is prone to crises. You can, if you see the world through resolutely libertarian glasses,
blame everything on interfering governments – it matters little. The
fact remains that the system as is, is unstable and run by the myopic,
the greedy and the corrupt. Where they draw their salary, which side of
the revolving door they happen to be on, on any day seems to me
irrelevant. The worst of them don’t understand and are easily bought.
The best have no concern for anyone or anything beyond their next bonus.

And here we are being led by them.

Of course saying another crisis is coming is like saying we are due a
large earthquake in Southern California. True, but it doesn’t mean one
is going to happen tomorrow. What I think it does mean is that we should
be thinking what our leaders, what the people they work for – the
global overclass – might already have in mind or have already put in
place, for what they want done next time. I think it would be foolish to
imagine they have not thought about it and are not putting in place the
things which will close off some futures and force us into others that
they prefer. They have so very much to lose and so very much more they
want to gain.The next crisis.

To know what the next crisis might look like we first have to look at
the conditions today that will form its starting point. Necessarily
everything from here on is speculation, nevertheless even when we can’t
know what people will do and what ‘events’ will overtake us, we can, I
think, discern quite a bit of the general topography, the landscape, of
the future.

The first thing we should bear in mind is that however it starts, the
next crisis will be another debt-crisis like the current one. This is
because debt is now the global currency and global financing mechanism.
Once it starts, however, one thing will be very different from the last
time – this time nearly all nations are already heavily indebted. Last time they were not. And this is what changes everything for the over-class.
Contrary to the endless misinformation repeated at every juncture by
austerity politicians and bankers alike, the debt load of most nations
at the beginning of the present crisis was not already out of control
before the banks blew up.

The green bars are debt as percentage of GDP before the bank bail outs and the blue bars are after. These are official Eurostat
figures. Notice Ireland. Its debt to GDP was down at 27%. The ONLY
thing that altered between 2007 and 2010 was the bank bails outs.
Ireland’s ENTIRE debt problem is due to bailing out private banks and
their bond holders. Britain’s debt almost doubled and again the ONLY
thing that happened was bailing out the banks. The government claims
that UK public debt was out of control due to spending on public
services is just WRONG. UK government debt against GDP had not gone up
in 7 years. Then when we bailed out the banks it nearly doubled. That is
the fact as opposed to the propaganda of what happened and why.

If you look a little more closely into the figures for government
debt levels in Europe between 2000 and 2010 the fact is that all
European nations apart from Portugal were either reducing their
debt-to-GDP level or at least not allowing it to grow. Most of Europe
was reducing government debt to quite manageable and historically low
levels. Ireland’s debt was very low (27%). Take a good long look at
those two bars for Ireland. Even Spain was bringing in more in tax than
it was spending. Don’t take my word for it look at the figures yourself. Almost every European country was keeping debt to GDP even or going down – before the banks were bailed out that is. The exceptions, of course, were Greece and Italy whose debt was already very high even before they bailed out their banks.

The sudden explosion of European sovereign debt is the direct and
indisputable result of all our political parties deciding they would
safeguard their mates’ and their own personal wealth (it is the top 10%
who hold the bulk of their wealth in the financial products which would
be destroyed in a bank collapse. NOT the rest of us!) by bailing out the
private banks and piling their unpaid debts on to the public purse.

So whatever the trigger of the next crisis may be, they know any
solution which saves the wealth and power of the over-class will have to
involve piling new, private-bank bad-debts on to already indebted
sovereigns and that, our leaders must be keenly aware, will not be easy
to force on an already angry public. They
know a whole range of the assurances they might like to give us about
what must be done when the next crisis hits and how those things will
undoubtably save us, will not be so easy to shove down people’s
throats.

“So what,” I can hear the 1% saying, “can we do?”

Here are some thoughts on what I think they can do, will do, are already begining to do and WHY they are doing them.

The over-arching thought that I have, which shapes everything from
here on, is that this crisis is no longer primarily financial; it is now
political. Any solution, no matter for whose benefit, is beyond the
scope of financial ‘reform’ but will depend on radical political change.
In my opinion, the era of reformist politics is over. The questions
are: radical change in which political direction? in whose hands? and
for whose benefit?
At the moment, I believe the radical thinking is almost all being
done on the 1%’s side. They may talk about fixing, but what I think they
mean is changing. When Obama spoke of change, he meant it. Just not
primarily for you. The 1% are not stupid. They see the need for change
and intend to control it.

I think one of the cleverset things the 1% have done over the last
few years is the way they have created a relentlless public discourse,
via their paid political front-men and women and their media empires, to
insist on the need to ‘fix’ and protect the system, and the extreme
danger to us all should the system not be ‘saved’. This has served as a
perfect cover for making sure that not enough people have noticed that
the system is, in fact, being gutted and replaced by something that
better serves the interests of the 1%. We have not been fixing the
banks, we have been feeding them.

So while the 1% are thinking ahead, too many of the 99% are still
like rabbits in the headlights, mesmerized and paralysed. They have been
told over and over that any radical change to our present financial and
political system is impossible, and if tried, would only bring disaster
upon us.The 1%, on the other hand, see clearly that the present system will bring disaster upon them if it isnotchanged
radically. They can see that it must be almost done away with entirely –
in all but name. The important thing for them is that the direction of
radical change benefit them and that the 99% not even realise that it is
happening.

And so far it’s working – just.
Just enough people continue, if grudgingly, to take refuge in a moribund
political system made of parties and theories which date back to the
Victorian age. The temporary triumph of the 1% is that despite the fact
that no one would drive a Victorian car, nor wear Victorian shoes or
clothes, they somehow feel there’s no choice but to rely on Victorian
political institutions, parties and ideas. The good news is that the
number who really believe this is dwindling and most of those who do, do
so out of fear not faith. Which is why our present, 1% controlled
politics, is increasingly about engendering fear rather than inspiring
faith.

Luckily truth has a wonderfully cleansing effect upon lies and fear.
So here are some of the things I think might be true about what is
really happening to and around us. Taken together I feel they begin to
amount to Manifesto for the 1%.